Complete Guide to Retirement Planning in Malaysia: Building Your Retirement Fund

Retirement may feel distant for many in their 20s and 30s, but the reality is already catching up — and it’s not pretty. A 2024 report by the Khazanah Research Institute (KRI) revealed that over 90% of Malaysians under 30 might be retiring with less than RM240,000, the minimum EPF savings target recommended for basic retirement needs by age 55.

The situation is just as alarming for Malaysians over 30. Only 1 in 10 Malaysians aged 30 to 54 has reached that RM240,000 threshold. Even more concerning, 6.1 million EPF members — nearly 40% of all contributors — have less than RM10,000 saved, while 3.6 million have under RM1,000 in their accounts.

A big part of the problem? Pandemic-era withdrawals wiped out RM145 billion from retirement funds — around 15% of EPF’s total assets — and wage growth hasn’t kept pace with the rising cost of living.

With life expectancy rising to 75 years, and the average retirement age still fixed at 60, Malaysians now face the challenge of stretching their savings for 20 years or more. And RM240,000 — or RM1,000 a month — is no longer enough for a dignified retirement.

Let’s look at practical ways to secure your retirement in Malaysia — from boosting your EPF, tapping into government incentives like PRS, to building a long-term investment strategy that actually works. Whether you're starting from scratch or catching up, the steps you take today can shape the retirement you want tomorrow. 2/2

How much is enough to retire in Malaysia? Here’s what EPF now recommends

If you’re still planning for retirement using the old RM240,000 EPF savings benchmark, it’s time for a serious rethink. That figure was set over a decade ago — and it no longer reflects what life in Malaysia actually costs today.

To address this gap, EPF launched the Belanjawanku 2024/2025 Guide and the Retirement Income Adequacy (RIA) Framework — two major initiatives designed to give Malaysians a more realistic, data-driven way to plan for their future.

The Belanjawanku Guide, developed in collaboration with the Social Wellbeing Research Centre at Universiti Malaya, now tracks the monthly living expenses of Malaysians across 12 cities, factoring in essentials like housing, food, transport, healthcare, and even social participation. 

The monthly cost of living has climbed across all household types in just two years — with a senior single now needing RM2,690/month in 2024, up 6.7% from RM2,520 in 2022.

Anchored on these updated numbers, EPF introduced a three-tier savings system to replace the outdated one-size-fits-all RM240,000 target

These benchmarks are built to support a 20-year retirement, aligned with Malaysia’s average life expectancy. Crucially, they reflect not just survival — but dignity, independence, and inflation-adjusted needs.

The new Basic Savings target of RM390,000 will be phased in gradually by 2028 and will also be reviewed every three years. But no matter your age, now is the time to assess your retirement readiness — because the lifestyle you want tomorrow depends on the steps you take today.

With only 36% of active contributors meeting the current age-adjusted savings target, the message is clear: most Malaysians aren’t saving enough. But the roadmap is now clearer than ever — and it starts with knowing your number.

Next, we’ll break down the different ways you can reach these savings milestones — even if you're starting late.

The basic: Retirement savings funds EPF and PRS

For most Malaysians, EPF (Employees Provident Fund) is the foundation of their retirement savings. But with rising living costs and longer life expectancy, depending solely on EPF may no longer be sufficient.

In fact, EPF has repeatedly highlighted a harsh truth: a majority of Malaysians do not have enough in their EPF accounts to retire comfortably. As far back as 2017, 68% of members aged 54 had less than RM50,000 — a sum that may last less than five years in retirement. Today, with inflation and lifestyle costs rising, that gap has only widened.

To strengthen retirement preparedness, Malaysians are increasingly turning to the Private Retirement Scheme (PRS) — a voluntary savings option introduced in 2012 to complement the EPF. Let’s dive into how both systems work, how they differ, and how using both can lead to a more secure future.

What is EPF?

EPF is a compulsory retirement savings scheme for all formal sector employees in Malaysia. Both employers and employees contribute a percentage of the employee’s salary to the fund every month. 

EPF invests mainly in low-risk assets like government bonds, aiming for stable, guaranteed annual dividends (minimum 2.5%). Historically, EPF has been able to generate a return of 5% and above, with the latest 2024 return at an impressive 6.3%. 

Key features of EPF:

• Compulsory for salaried workers
• Monthly salary deductions (11% from employee, 12–13% from employer)
• Self-contribution possible (maximum RM100,000 a year)
• Capital-preserving, lower-risk investment approach
• Government-regulated with guaranteed minimum returns
• Withdrawals allowed for retirement, housing, medical, and education
• Flexible withdrawals after reaching a certain milestone (e.g., RM1,000,000)

Read more: Complete Guide to EPF Withdrawal

What is PRS?

Launched in 2012, PRS is a voluntary, defined contribution pension scheme regulated by the Securities Commission and administered by the Private Pension Administrator Malaysia (PPA).

Think of it as your personalised retirement investment account. You decide:

• How much to contribute
• When to contribute
• Which fund manager and fund type to invest in

Just like EPF, your contributions are split into Sub-Account A (70%) and Sub-Account B (30%). Withdrawals are only allowed at age 60, or earlier under special conditions.

PRS is managed by licensed private fund managers, known as PRS Providers. You can pick one — or multiple — based on their track record, fees, fund types, and past returns (which are available on the PPA website).

Approved PRS providers in Malaysia include:

• AmInvestment Management
• AIA Pension and Asset Management
• CIMB-Principal Asset Management
• Affin Hwang Asset Management
• Manulife Asset Management
• Public Mutual Berhad
• RHB Asset Management
• Kenanga Investors Berhad

Each provider must offer at least three core funds:

Some providers also offer shariah-compliant PRS funds.

Here’s how to invest in PRS

Getting started with PRS is simple, and everything can be done online. Here’s what you need to do:

1. Set up your PPA account

• Visit PPA official website
• Register for an account (one-time RM10 fee)
• This  gives you access to all PRS funds and lets you track your investments in one place

2. Choose a PRS provider and fund

• Compare PRS providers on the PPA website — look at their funds’ past returns, fees, and fund types
• Each provider offers core funds: Conservative, Moderate, and Growth
• Select a fund that matches your age, risk appetite, and retirement goals

3. Make your first contribution

• Log in to your PPA account or go to the PRS provider’s platform
• Decide how much to contribute — no minimum requirement
• Pay online via bank transfer, FPX, or provider-specific apps

Pro tip: You can deduct up to RM3,000 per year from your taxable income just by contributing to PRS — that’s money back in your pocket come tax season. Plus, all investment gains within PRS funds are exempt from income tax.

EPF vs PRS: Key differences at a glance

Here’s a quick comparison between EPF and PRS:

Why you need both: Building a balanced retirement portfolio

Relying solely on EPF isn’t enough anymore. Here’s why:

1. EPF is stable but limited: While EPF offers safety and predictable returns, it may not keep pace with inflation or your desired lifestyle. The new EPF benchmark for Adequate Savings is RM650,000 — and most Malaysians aren’t on track to hit that.
2. PRS gives you flexibility and growth potential: With PRS, you have access to higher-yielding investments and the ability to customise your fund choices based on your age, risk tolerance, and goals. It’s especially useful for gig workers, freelancers, or anyone looking to top up their future income.
3. PRS is tax efficient: You can claim up to RM3,000 in tax relief annually by contributing to PRS, which reduces your chargeable income and increases your take-home savings.
4. Both complement each other: Think of EPF as your base — the essential savings you can’t touch. PRS acts as your booster fund — helping you grow and diversify your retirement income.

Building your own retirement savings funds

Before we dive into the best investment options, here’s a quick refresher on the real engine behind long-term wealth: compound interest.

Compound interest means your money earns interest on both your initial investment and the interest it already earned — like a snowball that gets bigger the longer it rolls.

Here’s how compounding works in practice:

Let’s say you invest RM10,000 in a fund that gives 5% annual returns.

• After 10 years, you’ll have RM16,288
• After 20 years, it grows to RM26,533
• After 30 years, you’re looking at RM43,219 — more than four times your original amount

The earlier you start, the more time compounding has to do the heavy lifting. It’s not about timing the market, it’s about time in the market.

1. Amanah Saham Bumiputera (ASB) & Amanah Saham Malaysia (ASM)

These fixed-price unit trust funds are managed by ASNB and offer capital stability with tax-free dividends. Both have seen a steady and healthy return of  4–6%.

• ASB is available to Bumiputera investors only and has consistently delivered annual returns above 5% for the past 5 years.
• ASM is open to all Malaysians but has slightly lower returns and limited unit availability. Though the return is not as high as ASB, ASM is still able to consistently deliver a return of > 4% for the past 5 years.

Read more: Ultimate Guide to Amanah Saham Bumiputera and Ultimate Guide to Amanah Saham Malaysia

2. High-yield savings accounts

High-yield savings accounts offer above-average returns without exposing your money to market risks. Some examples include UOB One Account and Standard Chartered Privilege$aver that offers up to 6% p.a. and 6.15% p.a. return respectively.

To unlock the best rates, banks typically require you to meet a few conditions—such as maintaining a minimum balance, spending with a debit or credit card, or setting up auto-payments. But in return, you enjoy higher returns and greater flexibility than fixed deposits.

Read more: Malaysia’s Best High-Yield Savings Accounts

3. Money Market Funds

Money Market Funds (MMFs) are low-risk, short-term investment vehicles that invest in high-quality financial instruments such as Treasury bills, repurchase agreements (repos), certificates of deposit (CDs), and commercial papers. 

Their main purpose is capital preservation with consistent, modest returns—typically between 2% to 4% per annum. MMFs are highly liquid and allow investors to withdraw funds quickly, making them ideal for emergency funds, short-term cash parking, or conservative portfolio allocation. 

As of December 2024, MMFs in Malaysia held RM124.98 billion in assets, representing 11.68% of the total industry AUM, according to the Securities Commission Malaysia.

Investors can buy MMFs through fund management companies, digital platforms like StashAway Simple or Touch 'n Go GO+, or online fund supermarkets such as FSMOne.

MMFs are not protected by PIDM but are regulated by the Securities Commission under strict portfolio and liquidity standards.

Read more: Complete Guide to Money Market Funds in Malaysia

4. Bonds and Sukuk

Bonds and sukuk are fixed-income instruments that offer predictable returns through scheduled payments over a set period. 

Bonds function as loans from investors to issuers—such as governments or corporations—who repay the capital at maturity along with regular interest (coupon). 

Sukuk, which comply with Shariah law, avoid interest and instead generate returns from profits or rental income linked to real assets or ventures. 

There are several types of bond and sukuk issuers in Malaysia:

• Government: Federal government issues such as Malaysian Government Securities (MGS) and Government Investment Issues (GII).
• Corporates: Private companies issue bonds (e.g., Medium-Term Notes, Commercial Papers) to raise capital for operations or expansion. These carry higher risk and are rated by credit agencies like RAM and MARC.
• Special Projects: Government-linked projects (e.g., KLIA2, MRT) issue bonds via entities like Danainfra or Prasarana. These are sometimes supported by government guarantees and often align with national development goals.

Among these, MGS and GII are considered the most reliable and lowest-risk fixed-income options, especially during periods of market volatility or economic uncertainty. Let’s look at the latest yields:

*as of April 2025

Read more: How to invest in Bonds and Sukuk

5. Fixed deposits

Fixed deposits (FDs) are time-bound savings instruments offered by banks that provide guaranteed interest returns over a specified tenure. 

When you place money in an FD, the funds are locked in for the agreed period—ranging from 1 to 12 months or more—and cannot be withdrawn early without a penalty. In return, banks pay a fixed interest rate, which is higher than regular savings accounts.

FDs are one of the safest investment options in Malaysia, backed by the Perbadanan Insurans Deposit Malaysia (PIDM) for up to RM250,000 per depositor per bank. Interest is typically paid upon maturity or periodically (monthly/quarterly). Shariah-compliant versions, known as Term Deposit-i, are also widely available.

Read more: Malaysia Best Fixed Deposit Rate

6. Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) are publicly traded investment vehicles that allow investors to gain exposure to income-generating real estate without owning property directly. 

A REIT pools money from multiple investors to acquire and manage a portfolio of commercial assets such as shopping malls, hotels, office buildings, and industrial facilities. Investors earn returns through regular dividend distributions, typically derived from rental income. 

To maintain tax-exempt status, Malaysian REITs must distribute at least 90% of their net income annually. REITs are traded on Bursa Malaysia and offer liquidity similar to stocks, making them an accessible option for retail investors.

Malaysia currently lists 19 REITs on Bursa Malaysia, including prominent names like Pavilion REIT, IGB REIT, and Axis REIT. These REITs are regulated under the Capital Markets and Services Act 2007 and must be approved by the Securities Commission. 

REITs are managed by licensed REIT managers and monitored by independent trustees to ensure investor interests are protected. Investors can buy and sell REIT units via a CDS and trading account, just like stocks.

With low entry costs and dividend yields typically ranging between 5%–7% annually, REITs serve as a cost-effective, income-generating alternative to direct property investment.

Read more: Beginner’s Guide to Real Estate Investment Trusts (REITs)

7. Gold and precious metals

Gold investment involves allocating capital into physical gold, gold-backed securities, or digital gold platforms to hedge against inflation, diversify a portfolio, or preserve wealth. 

As of April 2025, gold prices have surged to a staggering ~$3,300 per ounce, representing a 41% return year-over-year, driven by global economic uncertainty, central bank demand, and currency volatility. 

Investors in Malaysia can choose from several options: physical gold (bars and coins available via Public Gold, Maybank, or jewelry stores), gold ETFs (e.g. TradePlus Shariah Gold Tracker, SPDR Gold MiniShares), gold investment accounts (offered by Maybank, CIMB, Public Bank, etc.), and gold-related stocks (like Poh Kong and Tomei).

All methods rely on the global spot price of gold, which fluctuates based on supply-demand dynamics, USD movements, inflation expectations, and geopolitical tensions. 

Read more: Complete Guide to Gold Investment

8. Stocks and equities

Stocks, or equities, represent fractional ownership in a company. When you buy a stock, you become a shareholder entitled to a portion of the company’s earnings and assets.

Stocks are traded on stock exchanges such as Bursa Malaysia, NYSE, or NASDAQ, and their prices fluctuate based on company performance, investor sentiment, and broader economic indicators. 

Investors earn returns through capital gains (when the share price increases) and dividends (a share of the company’s profits). In Malaysia, popular platforms for stock trading include Moomoo, Rakuten Trade, and Webull for both local and global markets. According to the MRII 2023 report, 39% of Malaysian retail investors favour stocks, citing accessibility and potential long-term gains.

Diversification is critical in stock investing—spreading investments across sectors, regions, and asset classes reduces risk. Instead of relying solely on Malaysian stocks, investors should consider global equities to access high-growth markets like the US and China. 

It is important to protect your portfolio and blue-chip stocks and exchange traded funds (ETFs) are especially valuable. 

Blue-chip stocks—typically large, well-established companies with strong balance sheets and a history of consistent dividends—tend to offer greater resilience during market downturns. 

Meanwhile, ETFs provide instant diversification across dozens or hundreds of companies, helping mitigate single-stock volatility. Together, they form a strong foundation for a protected, long-term investment strategy.

Pro tip: With StashAway General Investing, you can invest into multiple ETFs across global markets in one go.

Read more: How to Buy Stocks in Malaysia

9. Exchange traded funds (ETFs)

Exchange-Traded Funds (ETFs) are open-ended investment funds that track the performance of an index, commodity, bond, or a basket of assets. 

Like individual stocks, ETFs are traded on exchanges throughout the day at market prices. This allows investors to buy and sell units with high liquidity and real-time pricing. 

ETFs offer an efficient and low-cost way to diversify portfolios without having to buy each underlying asset individually. In Malaysia, ETFs listed on Bursa Malaysia include options like the FBM KLCI ETF, TradePlus Shariah Gold Tracker, and ASEAN 40 ETFs. 

For global exposure, investors can access US-listed ETFs such as SPY (S&P 500) and QQQ (Nasdaq-100) via platforms like StashAway, Moomoo and Webull.

StashAway simplifies ETF investing through its General Investing portfolios, which are built using 24 globally diversified ETFs across equities, bonds, commodities, and real estate. Managed using the ERAA® (Economic Regime-based Asset Allocation) framework, these portfolios dynamically adjust based on macroeconomic conditions to enhance returns and reduce risk. 

This approach provides layered diversification across asset classes, geographies, and sectors—making ETF investing accessible, automated, and aligned with long-term financial goals. With low annual fees (0.2%–0.8%) and no lock-ins, StashAway is ideal for investors seeking a passive and globally diversified strategy.

Read more: Complete Guide to ETFs in Malaysia

10. Mutual funds and unit trusts

Unit trusts and mutual funds are professionally managed investment schemes that pool money from multiple investors to invest in a diversified portfolio of assets, such as equities, bonds, and money market instruments. 

In Malaysia, these funds are regulated by the Securities Commission and play a major role in the RM1.04 trillion fund management industry. 

Investors buy units in the fund, and the value of these units fluctuates based on the underlying asset performance. Income is typically generated through dividends or capital gains, and unit trusts are often accessed via banks, financial advisors, or platforms like Fundsupermart and FSMOne.

Despite their popularity, unit trusts come with high fees—often up to 5.5% in upfront charges and 1.5%–2.0% in annual management fees—making them less cost-efficient over time. 

A more affordable and flexible alternative is StashAway, which builds globally diversified portfolios using ETFs, with annual fees ranging from only 0.2% to 0.8%. These portfolios are automatically managed and rebalanced to match each investor’s risk profile, offering broader exposure, lower costs, and better long-term potential than traditional unit trust products.

Read more: Complete Guide to Unit Trust Investments in Malaysia

Retirement investment strategies

Too many people think about retirement only when it’s right around the corner—but by then, it’s often too late to course-correct. A solid retirement investment strategy isn’t just about growing your money—it’s about making sure you don’t outlive your savings. It’s about avoiding panic when markets drop, knowing what you can spend without running dry, and sleeping well at night knowing you’ve done the work early.

The truth is, most people underestimate how much they’ll need, overestimate how long they can work, and overlook inflation, healthcare costs, or even unexpected life events. So if there’s one rule to remember: start now, even if you feel behind. Here's how to build a strategy that protects and grows your money as you plan for retirement:

1. Know your risk—and manage it wisely

Start by being honest about how much volatility you can handle. If you panic every time the market drops 5%, a 100% equity portfolio isn’t for you. Instead, balance higher-growth assets like stocks with lower-risk assets like bonds or money market funds.

• Diversify across stocks, bonds, REITs, and even cash or gold. Don’t rely on just one asset to carry your future.
• Rebalance regularly. As you grow older, you’ll want to shift into more stable, income-generating assets.

2. Focus on long-term, not short-term noise

Retirement planning is a decades-long journey. Short-term bets, hot stock tips, or chasing returns often backfire. Stick to a long-term plan with disciplined investing—blue-chip stocks, ETFs, or diversified portfolios.

3. Separate your retirement fund from your savings

Don’t treat your retirement fund like a bank account. Keep your emergency savings for short-term needs, but your retirement money should be invested with a longer horizon.

• Use products designed for the long-term, like EPF, PRS, SRS, or retirement-focused portfolios.
• Avoid withdrawing retirement funds early unless absolutely necessary—it breaks compounding and creates a gap that’s hard to recover from.

4. Review and adjust

Your lifestyle, income, and priorities will change—and your strategy should too. Review your plan at least once a year to make sure it’s still on track. Don’t leave it to autopilot.

5. Don’t wait

The biggest mistake is waiting until you think you have “enough” to start. Even RM100 invested consistently can grow meaningfully over 20–30 years. The earlier you start, the less you’ll need to invest later. Time is your greatest ally.

How much do you need to retire? Why every retirement plan starts with a number

Before you get too excited with your retirement investment plan, you need to know what you’re aiming for. 

That’s why one of the most important steps in retirement planning is figuring out how much you actually need to retire. Without this number, everything else—your portfolio, your timeline, your strategy—is just guesswork.

A good retirement plan starts with projecting your future expenses: housing, healthcare, food, transport, and lifestyle costs like travel and hobbies. 

A common rule of thumb is to replace around 80% of your current income each year in retirement. For example, if you earn RM100,000 now, aim for RM80,000 per year in retirement income for about 20–25 years—roughly RM1.6–2 million in savings. 

But that figure isn’t one-size-fits-all. You’ll need to factor in inflation, life expectancy, and whether you plan to retire early, work part-time, or downsize your lifestyle.

It’s never too early—or too late—to plan. But the earlier you start, the more time you give your money to grow.

What not to do: 4 common mistakes that can derail your retirement plan

Planning for retirement isn’t just about how much you save — it’s also about knowledge and discipline. Many Malaysians unintentionally make missteps that could undermine decades of effort. Let’s look at the common mistakes that most Malaysians make:

1. Delaying your savings journey

The biggest advantage young savers have is time — and yet, it's often the most wasted. The later you start saving, the harder it becomes to catch up. Compounding interest works best when it has time on its side.

What to do instead:

Start saving as early as possible, even if it’s just a small amount. Follow the 45/35/20 rule — spend 45% of your income on essentials, 35% on commitments, and allocate at least 20% to savings.

2. Underestimating retirement expenses

Many overlook just how expensive retirement can be — especially when factoring in rising healthcare costs, inflation, and leisure plans. What seems like “enough” now may fall short later.

What to do instead:

Use tools like the Belanjawanku app or a retirement calculator to map out realistic monthly needs. Regularly review your plan as your lifestyle and economic conditions change.

3. Relying solely on your EPF

EPF is a strong foundation, but it shouldn’t be your only pillar. With average annual returns around 5%, it may not keep pace with your goals or inflation long-term.

What to do instead:

Diversify your retirement strategy with PRS, ASNB, REITs, ETFs, or unit trusts depending on your risk tolerance and time horizon. Speak to a licensed financial advisor to explore options that suit you.

4. Having no backup for emergencies

Medical bills, job loss, or urgent home repairs can force you to dip into your retirement savings — unless you have a buffer in place.

What to do instead:

Build a separate emergency fund that covers at least 3–6 months of expenses. Supplement it with adequate insurance coverage to protect against life’s unexpected events.